For some investors, the social responsibility of investment options matter. But those investors are not the majority.
Spectrem’s research study of affluent investors Financial Attitudes and Concerns studied the interest investors have in the social responsibility of their investment choices. The fact is that social responsibility does not matter when most investors make their financial decisions regarding investments.
The Spectrem study examined the interests of investors from three different wealth segments, and the wealthiest segment was the Ultra High Net Worth Investor, with a net worth between $5 million and $25 million Not Including Primary Residence. Among that segment, only 20 percent of investors said the social responsibility of investments was a factor in their investment selections.
It is interesting to note that the lowest wealth segment studied by Spectrem’s report, the Mass Affluent, showed that 36 percent concerned themselves with the social responsibility of their investments. The Mass Affluent investors are those with a net worth between $100,000 and $1 million NIPR.
There are differences among segments within the wealth segments on the topic of social responsibility of investments. For instance, 26 percent of UHNW Business Owners said they considered whether their investment selections were socially responsible.
Age was also a factor. Asked to rate their level of interest about the social responsibility of investing on a 100-point scale, with “0” meaning no interest and “100”” meaning great interest, the average UHNW investor placed their interest at 33.6. But the UHNW investors under the age of 49 rated their interest at 46.6, almost the midpoint, while those over the age of 64 rated it at 30.7, well below the average.
Again, in comparison to the Mass Affluent investor, UHNW interest was well below. While the UHNW average was 33.60, the Mass Affluent average level of interest was 42.84.
While it is easy to imagine why investors would care about socially responsible investing, the reasons for a lack of interest vary. Sixty-five percent of UHNW investors said their investment objectives are purely financial, with no other factor weighing in.
Thirty-nine percent believe claims of social responsibility are only a marketing ploy and nothing more than public relations, while 31 percent believe corporations should do all they can to generate a profit, leaving the investment of a socially responsible nature to the individuals.